The real estate market in the UAE: the calm before the storm

The UAE has been a country with a very strong economy for many years thanks to its large oil reserves, which allows maintaining the level of the country's inhabitants at the highest level. This December, the passport of a citizen of the United Arab Emirates topped the Global Passport Power Rank 2018, that is, it became the strongest in the world. Nationals of this country can travel without prior visas to 167 countries of the world, which is 84% of all countries included in the rating. Earlier, the UAE Ministry of Foreign Affairs set itself the goal of making the state's passport the strongest in the world by 2021, but reached it three years earlier.

2019: Residence permit for 10 years

True, it is almost impossible to obtain Emirati citizenship due to the fact that local authorities intend to strictly limit the number of residents who can enjoy the benefits provided by the state for their citizens. But getting a residence permit is quite realistic: for this, starting from 2019, it is enough to purchase real estate in the country in the amount of 1 million dirhams. After that, it is possible to issue a residence permit for one such purchase is possible not only for the investor himself, but also for all close relatives.

The main concentration of real estate in the country is located in the emirate of Dubai, which ranks first in terms of population in the UAE. An interesting fact is that only the rulers of Dubai and Abu Dhabi have the right to veto decisions on the most important issues of state importance in the country's legislation, therefore these two emirates are peculiar states in the state.

The global crisis for the benefit of the real estate market in Dubai

As in many countries and cities with demanded real estate, in the UAE a few years ago the real estate market was very overheated. However, in 2014, oil prices fell, which certainly affected the local housing market. The crisis that erupted around the world, sanctions, and much more had a strong impact on the acquisition of Emirati square meters by foreigners. If the Russians previously made up a significant part of home buyers in the UAE as an investment, acquiring it back in the period "on paper", which then made it possible to resell it profitably, today the opportunities have become more modest. However, this played into the hands of waiting for a decline in the value of real estate - over the past four years, it has decreased by about 20%.

This was influenced not only by the general economic situation, but also by the increase in supply on the market. Projects grew like mushrooms after a rain in the hope that the property will always quickly find its buyer, but there has been some lull. On average, the cost of a square meter on the primary market is now $ 2350, and on the secondary market - $ 2050. If we count in terms of cost per square meter, then the most expensive housing is now located in the Burj Khalifa skyscraper and on the territory of the most expensive villas - in Emirates Hills and XXCarat on Palm Jumeirah.

It is not possible to predict the exact bottom of the housing cycle, but most real estate analysts agree that prices will stabilize ahead of World Expo 2020, which is expected to bring about 25 million visitors to Dubai and provide at least short-term stimulus for the property market. ...

80% of home buyers are foreigners

Today - although the topic of construction has become calmer compared to previous years - in addition to the development of existing areas, completely new areas with villas or apartments with all the necessary infrastructure continue to appear. Most often they buy apartments with an area of 50-100 sq.m. For example, for $ 130,000 in Dubai, you can buy a studio or one-bedroom apartment in economy class districts. In the coastal area of Ras Al Khaimah, you can purchase a studio or 1-bedroom apartment in a residential complex with a private beach. A good one-bedroom apartment in the popular area of Dubai Marina will already cost from $ 300,000.

The number of foreign buyers continues to be significant: 80% of them are foreign buyers, mainly from India, Pakistan, China. But there are very few buyers from Russia - no more than 2%. Both local developers and the Dubai government are working hard to make the property more attractive to foreign investors. In the past year, UAE legislators have launched a series of policy reforms to encourage foreign residents to buy homes and start businesses.

UAE is a reliable country for investment

Some developers have cut payment plan requirements to make home ownership more realistic for middle-income residents. Even Emaar, the largest developer responsible for some of the most luxurious and iconic buildings in the city, including Burj Khalifa, offers installments in payment plans. This is also why buyers are better off choosing leading developers who are sufficiently funded and tend to produce a better product.

Based on the assumptions, the real estate market in Dubai will continue to grow, especially since the country recently announced a record federal budget for the next three years - as a stimulus for the economy. You can also follow the recent statistics released by the local Land Department detailing the number of new investors in the Dubai property market. Land Department figures show that over the past eight months, 9,500 new investors have appeared, thanks to which there have been injections of $ 5 billion into the economy. The successful economy of the state, summer all year round, an offshore zone and the almost complete absence of taxes on real estate cannot but attract investors today.

Thank you for your help in preparing the material:

Maria Chernikova, realtor at Rustar Real Estate

Marina Mikhalenko, real estate consultant at Metropolitan Premium Properties

Oleg Nasyrin, head of department at Nazarov & Partners